Archive | Mortgage
The National Association of REALTORS released some updated infomation on the affects of short sale, foreclosure, bankruptcy and deed-in-lieu of foreclosure on FICO scores and the ability to purchase another home.
Short Sale (Deed-inlieu of Foreclosure Guidelines are similar) – According to the report the affect on your FICO score from short sale depends on how the sale is reported to the credit bureau. If reported as “not paid as agreed” the score could go down 100+ points. Late payments will also affect the FICO score and are reported for 7 years, with thier impact lessening over time. Buyers looking to purchase after a short sale will have to wait to purchase another home. If purchasing using FHA financing the wait is 3 years (possibly less if not in default at time of short sale). For a Fannie Mae insured loan buyers need only wait 2 years if putting 20%+ down, 4 years if putting between 10%-20% down, and 7 years if putting less than 10% down. If getting a Freddie Mac insured loan the wait is 4 years, 2 years if extenuating circumstance are documented.
Foreclosure – A foreclosure stays on your credit report for 7 years, with the impact lessening over time. A foreclosure could lower your FICO score 100+ points. Buyers looking to purchase after a foreclosure will again have to wait. If purchasing using FHA financing the wait is 3 years. If getting a Fannie Mae insured loan the wait is 5 years from the foreclosure sale date, 3 years if there are extenuating circumstances. Additional underwriting requirements may be required. The wait for Freddie Mac insured loans is similar with a 5 year wait, 3 years for exentuating circumstances.
Bankruptcy – Bankruptcies stay on your credit report for 7 years (10 if there was a full discharge of debt). Bankruptcies generally have a greater negative affect on the FICO score in comparison to the above mentioned issue. Buyers looking to repurchase after a bankruptcy using an FHA loan will have to wait 2 years from discharge date with a chapter 7 BK and 1 year with a chapter 13 BK. If getting a Fannie Mae or Freddie Mac insured loan there is a 4 year wait for chapter 7 or 11, and 2 year wait if chapter 13. Some allowance are made for exentuating circumstances.
Extenuating Circumstances – include serious illness or death of a wage earner, but do not include an inability to sell a house due to job transfer or relocation.
For a full copy of this report please feel free to contact me.
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The Washoe County Senior Services Senior Law Project is holding free foreclosure workshops this month for people who need help in keeping their homes. These workshops are open to the public.
The workshops are being held at Reno Center at 1155 E. Ninth Street in Reno.
Saturday, December 5th from 9am to Noon Saturday and Wednesday December 16th from 4pm to 6:30pm.
The goal of the events is to educate and empower people about what steps to take when attempting to modify their mortgage, the time frame of the foreclsure process, discussing common options that are available from your mortgage company and other options that may be available to you so you can retain your home.
For more information, email the Senior Law Project at slawproj@washoecounty.us. Space is limited to please RSVP at 775.328.2592.
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After two weeks of delay, the Senate last night cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.
The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.
For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.
By Steve Murray of Real Trends
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A good article for the Wall Street Journal.
Digging yourself out of a mortgage mess.
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An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction (also known as a Trustee’s Sale). Trustee Sales (often an auctions held on the courthouse steps) begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living on the property. There may also be other liens against the property. Trustee’s Sales are typically advertised via local, public notices such as local newspapers.
Since what is owed to the bank is almost always more than what the property is worth, very few Trustees’ Sales result in a successful closing. If the Trustee’s Sale is unsuccessful the property reverts to the bank or loan servicer and is now considered REO, or “real estate owned” property.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will typically negotiate with the IRS and local municipalities for removal of tax/municipal liens and they normally pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will typically receive “clear title” and the opportunity to thoroughly inspect the property. These are the properties buyers will typically see on MLS.
A bank owned property might not be a great bargain. Do your homework before making an offer. Make sure that the price you’re offering is comparable to similar homes in the neighborhood. Consider the costs of renovation. Last but not least, consider your loan type and down payment amount. Loans with high “loan to value” (small down payment) generally require that the home be in good condition.
A well informed real estate agent, representing the buyer exclusively is invaluable in such a transaction. There are many pitfalls and complications that can be avoided with such representation.
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Interest rates on home mortgages dropped again with the 30-year fixed-rate mortgage averaging 5.08%.
Check out this article in the Wall Street Journal.
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A large majority of U.S. banks claim government bailout money has allowed them to write new loans to customers, while a minority have used it to buy rivals, according to a report by Neil Barofsky, the special inspector-general for SIGTARP-Special Inspector General for the Troubled Asset Relief Program.
The report reveals a continuing argument with the U.S. Treasury over how much information should be disclosed by recipients of the money. Some 83% of the 360 recipients surveyed by the SIGTARP team said they had used funds from the government for lending. That may provide a boost to both the banks and the Treasury after a week in which Goldman Sachs, one recipient of Tarp funds, encountered criticism for preparing to pay large bonuses. Forty-three per cent said they had bolstered their capital cushion, 31% made other investments-such as mortgage-backed securities-14% repaid debt and 4% made acquisitions.
There was no independent verification of the responses. Herb Allison, the former chief executive of Fannie Mae, said in a letter in the report: “It is not possible to say that investment of Tarp dollars resulted in particular loans, investments or other activities by the recipient.”
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Whew! Resale, residential real estate inventory is down all over town. In some price ranges and areas we are actually seeing some appreciation. Anyone looking for a nice, well priced home in the $100,000 – $200,000 range can tell you that. Many banks, brokers, buyers & sellers are starting to truly understand the short sale process and we’re seeing a much higher rate of closing.
Foreclosure crisis over right? I think not! There are some serious issues looming, some are here now:
- Notice of Defaults: Up over 100% when measured against last year in Washoe County. The foreclosure moratorium (Winter ’08 – Spring ’09) put a cork in the bottle for a few months but we’d better brace for the next wave.
- Option ARM’s: This next wave will be different and not just a sub-prime problem anymore. These are often nice, sometimes upscale homes and lenders were often incentivized to get these borrowers as much credit as possible. These borrowers have (or sometimes had) good jobs and great credit. For many “Pick a Payment” sounded like a good idea at the time. The number of units (properties/loans) re-setting is quite similar when compared to the sub-prime mess. The total dollar volume of these loans is significantly greater.
- 5 stages of grief: Many Washoe County neighborhoods have depreciated 50 – 60% from the peak: Often these homeowners, not yet in distress, are either unaware or in some stage of denial. Besides, “Won’t the bank simply modify my loan”? I for one sure hope so but don’t hold much faith. I recently heard that over 70% of those borrowers granted loan modifications fell into default within 10 months.
- HVCC: The Home Valuation Code of Conduct was intended to head off some of the nepotism inherent in the relationship between the banks & appraisers. It worked and loan officers can no longer communicate with the appraisers. We’re now losing 25 – 30% of our transactions over failed appraisals. I can’t blame the appraisers, why not get conservative? This lame attempt to curb favoritism has created an absolute lack of accountability and favors the unskilled.
- Show me the money: China, Russia, Japan & many others are financing our low interest rates with their investment. That investment dropped significantly last month over fears that the US might be spending too much. Ya think??? No doubt they’ll come to the table with more funds in the future. It’s also likely they’ll want a greater return on investment or higher interest rates.
It’s going to be a long winter but I consider myself up to the task. It will likely fall in the laps of local Real Estate Professionals to fix it this time too.
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Many homeowners in the Reno-Sparks area are facing issues with mortgage delinquency and possibly foreclosure. This can be a very stressful time and knowing the process and where to go for help can be very beneficial. As a member of the Nevada Association of REALTORS Foreclosure Prevention Task Force, I have come across a very valuable tool for homeowners – “Nevada Foreclosure Information Workbook”. This booklet was compiled by the Nevda Statewide Foreclosure Prevention Taskforce. You can download this booklet from Nevada Department of Business and Industry’s website. Here is a link http://foreclosurehelp.nv.gov/Brochures/ForeclosureWorkbook.pdf.
The booklet covers topics like – Understanding Delinquency, Understanding Your Financial Situation, Know Your Mortgage, Know Your Options, Beware of Scams, Tools for the Homeowner, and Document Checklist for Dealing With Your Lender. There are also definitions for many of the terms you may need to know. There is also a list of resources.
If you are facing issues with delinquency the best thing you can do is take a pro-active approach and educate yourself on the process. This will enable you to have more successful results when dealing with your lender.
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Great news in thie messed-up, mixed-up world of mortgage lending.
The Fair Mortgage Collaborative has recently been formed to provide protection to homebuyers. This collaborative is made of of groups such as the Ford Foundation, the Consumer Federation of America, Acorn Housing, and the Center for Responsible Lending.The Collaborative will certify that lenders meeting five standards of conduct are “fair and safe”, including a ban on predatory lending practices.
In addition, certified lending organizations, such as BECU (Boeing Employees’ Credit Union), Prime Alliance Solutions, Federation of Appalachian Housing Enterprises, Inc., Mortgage Grader and Clearinghouse CDFI, will offer the new FMC-certified “fair and safe” mortgages from coast-tocoast.
FMC’s current crop of certified lending organizations provide mortgages currently totaling $520,000,000 per year. That level is expected to double or more in the first year of the program, with further growth anticipated as the demand for mortgages that are certified “fair,” “safe” and non-predatory takes hold.
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Saturday, July 24, 2010 By: Amy Shocket
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